Worker welfare digest

Worker welfare digest - Issue 4 - March 2018

Welcome to the fourth issue of our worker welfare newsletter, focusing on the risks investors and businesses face from labour in their supply chains.

In this issue we look at the role of sub-agents in the recruitment cycle, the recent ban on Filipino workers being employed in Kuwait and the ban’s broader effects in the Gulf, as well as the implications of the new merger between India’s eMigrate system and the UAE Ministry of Human Resources and Emiratisation’s portal.

Did you know?

The less information a business has about its recruitment cycle, the more potential abuses workers are likely to experience. Many migrant workers and recruitment agents rely on sub-agents to facilitate their recruitment for work abroad. This usually happens through informal relations. Sub-agents are not necessarily employed as staff of recruitment agencies, but could be family members or friends with connections in their local communities in the workers’ countries of origin. Due to the informality of sub-agents’ operations, the lack of licensing protocols and the fact that they often operate independently, it is difficult to identify them or trace fees that have changed hands during the recruitment cycle. The greater the number of sub-agents in the recruitment cycle, the more a worker could be charged. This informality also enables recruiters to distance themselves from activities conducted by unregulated sub-agents.

This presents a number of challenges for countries of origin when regulating recruitment within their borders, but also for countries of destination and businesses that need to ensure compliance with industry standards and national and international laws. In response to international interest over worker-paid recruitment fees, Qatar has stated that it will be paying back the recruitment fees for more than 30,000 workers building the 2022 FIFA World Cup stadiums through the Supreme Committee for Delivery and Legacy. This move has been praised by the International Trade Union Confederation as a positive step toward ensuring that workers do not pay excessive recruitment fees, while Amnesty International has said that “contractors have the responsibility to respect human rights….proactively preventing labour abuses in their contracting chain”.

Philippines Overseas Foreign Workers deployment ban

On 9 February, the Philippines’ president, Rodrigo Duterte, and his administration ordered a ban on all new overseas foreign workers (OFWs) travelling to Kuwait after unchecked human rights abuses and lack of dignity were cited by Duterte as the main factors contributing to the death of Filipino citizens. Duterte warned that he may extend this ban to include other countries if investigations prove that Filipino citizens are being abused by their employers. Duterte’s ban could create operational risks to businesses over the medium to long term, as the Middle East is the favoured destination for the majority of the 2.2m Filipino OFWs.

With almost 57% of OFWs migrating to the Gulf, the ban is also likely to result in an increase in abuses faced by Filipino workers who are determined to seek better employment opportunities abroad.

This is because an influx of OFWs with Gulf experience into an already saturated employment market may prompt job-seeking Filipinos to use unregulated and informal channels of migration. The use of these channels brings with it a host of labour welfare risks, such as excessive recruitment expenses and greater debt bondage, increased skills mismatch and forced-labour abuses. At a time when hiring expatriate labour is becoming increasingly arduous and expensive, a deployment ban on a group of workers in any country is a move that may affect future trade relations.

Focus on

In a major step forward for the protection of workers’ rights and transparency in the recruitment of workers, Indian Prime Minister Narendra Modi signed a memorandum of understanding with the UAE to link India’s eMigrate system with the UAE Ministry of Human Resources and Emiratisation’s portal by June 2018. This follows other government-to-government (G2G) agreements to either try to eliminate private actors from the recruitment process or set out guidelines and monitoring processes for recruitment agencies, such as South Korea’s Employment Permit System and agreements between Saudi Arabia and Bangladesh and India. The eMigrate system was set up in 2015 as an initiative by the Indian government to protect Indian workers seeking employment abroad who are most at risk of abuse. The system provides greater transparency in the recruitment process of workers by requiring foreign employers and local recruitment agencies to register on the system. It also requires that contracts and salaries approved by the destination country embassies are registered before an Employment Check Required stamp is given.

What does this mean for businesses operating in the UAE?

When the linking of the two systems is complete, besides being the first G2G portal in the Gulf Cooperation Council region, a single offer letter and contract will be legally binding in both India and the UAE. This will afford an employee legal protections in both jurisdictions. Businesses will no longer be able to set lower wages than those agreed upon and approved by India and the UAE, essentially setting a minimum wage for Indian workers in the UAE.
Although India is historically the primary source country for workers, UAE businesses will seek to recruit workers from other countries in order to avoid increased costs. Labour agreements signed in recent years between the UAE and South Asian and African countries, including Nepal and Kenya, may result in a gradual decrease in the number of Indian migrant workers in the UAE.

Figure 1: Composition of the expatriate community in the UAE

Source: Federal Competitiveness and Statistics Authority UAE; the Embassy of India to the UAE

Entering a new market or adopting a new project is often challenging. It is not simply a question of being able to complete the project or not, but one of delivering genuine growth for the business and mitigating against any potential risks you might encounter.